In August 2022, CRC announced the formation of a joint venture (JV) with Brookfield Renewable (Brookfield) focused on carbon capture and sequestration (CCS) development opportunities.
Brookfield has committed an initial $500 million to invest in CCS projects that are jointly approved through the JV. The investment from Brookfield will be allocated through the Brookfield Global Transition Fund (BGTF), the world’s largest fund dedicated to facilitating the global transition to a net zero carbon economy. Brookfield, together with its institutional partners, will participate in the joint venture through BGTF.
The first CCS project designated for development is CRC’s 26R reservoir in the Elk Hills Field which was contributed to the partnership at a value of $10 per metric ton. The initial Brookfield commitment of $500 million provides CRC with additional capital to advance the Company's carbon management strategy, de-risks its CCS projects and aims to significantly progress the decarbonization of California. The JV is targeting the injection of 5 million metric tons per annum and 200 million metric tons of total carbon dioxide (CO2) storage development, aligned with CRC’s 2027 goal.
Partnership Highlights:
- CRC and Brookfield will jointly develop CCS projects in California through a newly created JV. The JV will be owned 51% by CRC and 49% by BGTF.
- The California Carbon Management Partnership with Brookfield is an important step in CRC’s Full-Scope Net Zero 2045 Goal and Carbon Management Strategy. It highlights the value of CRC's expansive CO2 pore space portfolio while demonstrating the Company’s commitment to capital discipline and retaining flexibility for strategic corporate objectives including shareholder returns and investing in the business.
- Strengthens CRC’s competitive position in CCS deployment with Brookfield’s infrastructure investment experience, operating knowledge, and capital allocation. CRC and Brookfield are targeting the development of the injection of 5 million metric tons of CO2 per annum over the first five years of the strategic partnership.
Reaching this target would require an estimated $2.5 billion of total capital, and Brookfield could make additional investments of more than $1 billion in the strategic partnership assuming it fully participates in these CCS projects.
The strategic partnership will benefit substantially from CRC’s first mover advantage in gaining access to available storage assets in the state of California and Brookfield’s knowledge in global clean energy markets. California is a world-leading location for the development of CCS projects, driven by the state’s Low Carbon Fuel Standard and Cap-and-Trade programs, together with the federal 45Q tax credit of $50 per ton of CO2 captured and permanently stored. CRC is currently progressing CO2 storage project permit applications and represents four out of the five Class VI well project applications on file in California.
The strategic partnership will involve developing both infrastructure and storage assets required for CCS projects in California through newly created joint venture entities, Carbon TerraVault JV HoldCo, LLC (HoldCo), Carbon TerraVault JV Storage Company (StorageCo) and Carbon TerraVault JV Infrastructure Company, LLC (InfraCo).
- StorageCo will build, install, operate, and maintain CO2 storage facilities. CRC has contributed the storage rights in the 26R storage reservoir in the Elk Hills field to a wholly owned subsidiary of StorageCo.
- InfraCo will build, install, operate, maintain CO2 capture equipment and transportation assets, and provide funding as projects develop.
- StorageCo and InfraCo are wholly owned by HoldCo.
For more information, view the California Carbon Management Partnership presentation (PDF).